The Ninth Circuit Court of Appeals overturned a $9 million fine imposed on Yuga Labs during the litigation against artists Ryder Ripps and Jeremy Cahen.
Case Overview and Court Ruling
Yuga Labs, creators of the Bored Ape Yacht Club NFT collection, filed a lawsuit against Ryder Ripps and Jeremy Cahen in 2022, alleging that their NFT collection titled "Ryder Ripps Bored Ape Yacht Club" constituted trademark infringement and cybersquatting.
According to court documents, a lower court had previously ruled in favor of Yuga Labs, initially awarding $1.6 million, which was later increased to $9 million.
Reasons for Overturning the Fine
The three-judge panel noted that Yuga Labs failed to prove that the NFTs created by Ripps and Cahen were "likely to cause consumer confusion". Consequently, the case has been remanded back to a California federal court for further proceedings.
The judges highlighted that while NFTs can be considered "goods" under the Lanham Act and that Yuga Labs has priority due to its earlier trademark use, the evidence of consumer confusion remained unresolved.
Positions of the Parties and Next Steps
Yuga Labs accused the defendants of using nearly identical names and visuals to promote their NFT series, misleading buyers and capitalizing on their reputation. In response, Ryder Ripps defended his collection as a form of artistic protest and satire, claiming it was created to combat "racist undertones" in Yuga's original imagery.
The case is now set to progress in court where central trademark questions will be addressed.
The overturning of the $9 million fine and the remanding of the case to trial set the stage for new developments in trademark litigation within the NFT space. The court reaffirmed Yuga Labs' trademark priority, which may play a pivotal role in the upcoming proceedings.
